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Optimal mark up pricing without market structure consideration
* : Corresponding author
Following Lerner 1934 a huge literature has emerged on mark-up, defining the optimal price has been a fraction of the price elasticity of demand times marginal cost. In practice, the marginal cost is difficult to evaluate and the price elasticity of demand should be less than -1 for price to be positive. This paper proposes a simple method to determine the optimal price of goods that is suitable for price elasticity greater than -1. The method that is simple to implement on market where firm buys goods at a given price and sales it at another price.
